The VA loans have become more popular in recent years. It’s a great program for veterans, as it does not require them to make a down payment. The program also has flexible guidelines and low interest rates. It’s no wonder veterans flock to this program. Before you do, though, you should know the properties that are eligible for VA financing.
Acceptable Properties for VA Financing
The following property types are usually acceptable for a VA loan. If one lender declines your application, don’t be afraid to find another VA approved lender to seek approval:
- Single-family homes – This is probably the most common type of home purchased. This means a single, stand-alone home that you own separate from any other homes in the area.
- Condominium – You can use VA financing on condominiums, however, you’ll have to make sure the development is approved by the VA. When you buy a condo, you just buy the interior component of the unit. All shared areas are owned in common with the other owners. Because there is also an association in charge, the VA must approve their methods, standards, and finances before you can use VA financing on a condo.
- Townhomes – Townhomes are a larger version of condos and have the same restrictions as condos. The VA must approve the entire development or no one can use VA financing on any unit in the development.
- Manufactured home – It can be harder to find a lender willing to lend for a manufactured home, but they are allowed by the VA. The only requirement is that the home is permanently affixed to the land it’s on. If you leave it as a ‘mobile home,’ VA financing will not be an option.
- New construction home – VA lenders don’t like to make construction loans, but the VA does allow it. More commonly, lenders require the veteran to get their construction financing elsewhere, such as the builder, and then they can refinance the construction loan into a VA loan once the home is complete.
- One-to-four unit property – You can use your VA financing to purchase a multi-unit property as long as you live in one of the units as your primary residence. The VA will allow you to rent out the remaining units to help you pay the mortgage as long as you don’t own any other property that you could potentially live in as your primary residence.
- Farmhouse – You can use VA financing to buy a house to live in on a farm. But you cannot use it to buy the farmland itself. You may include land in the purchase as long as there is a home that you will call your primary residence.
Even though the above properties are eligible for VA financing, there are still requirements the property must meet in order to qualify.
First and foremost, the veteran must certify that he will live in the property as a primary residence. You generally have 60 days to take up residency in the home before you are in violation of the VA’s rules. If you need more time because you are still in active duty or any other reason, you must petition the VA for an extension. Don’t make the mistake of assuming it’s okay to delay the move-in date
You are not able to use the VA benefit to purchase a home for any other purpose aside from daily living. If you are in the market for a vacation home or investment home, you’ll have to use another financing source. The only exception to the rule, as we discussed above is if you buy a multi-unit property and rent out the remaining units that you do not live in with your family.
The property, no matter the type, must also pass a VA appraisal. Not only must it be worth enough to cover the loan amount, but it must pass the Minimum Property Standards. This is how the VA ensures each property they guarantee a loan on is safe, sanitary, and livable. If the appraiser finds something wrong with the property that makes the home unsafe to live in, the VA will not guarantee a loan on the property. Luckily, the standards are nothing extraordinary and they actually help you to protect your investment. In other words, it prevents you from buying a property that would be a bad investment.
There are many properties you can buy with VA financing as long as it meets all of the requirements. If you qualify, you can secure 100% financing for a variety of different types of homes, giving you flexibility in your home purchase.